econstruction of the Disadvantaged Business Enterprise (DBE) program began before Donald Trump returned to the presidency, yet the changes align with the administration’s agenda on civil rights. DBE is a certification that federal contractors can obtain for preferential access when bidding on highway, transit, national recreational trails, or transportation technology projects.

The disadvantages, specifically, are defined in the Small Business Act of 1958, which states: “Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.” The law specifically includes Native tribes and, as a class, all women, although the size of a contracting business is capped, for purposes of the program.

The language formed the basis of a preference in federal transportation contracting established more than forty years ago. Congress enacted the DBE program to ensure nondiscrimination in federally assisted contracts and help remove barriers for those who certify with the program. This was followed by a statutory provision requiring state-level regulators to ensure that at least 10 percent of highway transit funds were expended with DBEs. A companion program, the Airport Concession DBE program, was added in 1987. Both programs have been reauthorized by Congress many times, notably in the “SAFETEA-LU” bill authored by the late Alaska Representative Don Young. The law was most recently amended in December 2024.

The amendment followed a ruling by one federal judge that has effectively nullified all current DBE certifications.

Amended, however, does not mean eliminated.

“There is still a DBE program in law,” noted Lauren Little, acting director and chief engineer of the Alaska Department of Transportation and Public Facilities (DOT&PF) Northern Region, during the November conference of the Associated General Contractors of Alaska. “We still have a program-level goal. Obviously, our state is race-neutral, which means we don’t have project-specific goals but a program goal to attain.”

DOT&PF is adjusting its DBE programs to align with an interim final rule (IFR) issued in October by the US Department of Transportation (USDOT). The rule eliminates the presumption of disadvantage based on race or sex. This change has suspended all DBE goals and mandated that all currently certified DBEs recertify once USDOT provides further guidance to state-level unified certification programs (UCPs), which DOT&PF manages for Alaska.

The IFR came a year after Judge Greg Van Tatenhove of the US District Court for the Eastern District of Kentucky granted a preliminary injunction in Mid-America Milling Co. v. US Department of Transportation when he found that USDOT could not prove a previous pattern of discrimination against minority and women-owned contractors and failed to narrowly tailor its presumptions because the program continued without a prescribed endpoint. The plaintiffs, an asphalt grinding contractor and a trucking company, alleged that they could not compete on an equal footing with women and racial and ethnic minorities that were DBE certified. Van Tatenhove, appointed to the bench in 2006 by then-President George W. Bush, did not rule on the merits but issued the injunction finding that plaintiffs were likely to prevail in their argument that DBE regulations violated the equal protection guarantee of the Fifth Amendment to the US Constitution and the Administrative Procedure Act.

Without the presumption of disadvantage, however, many contractors that had been bidding as DBEs might lose that certification. Exactly how many, no one knows for sure.

“We’re hoping for guidance from the Federal Highway Administration on how the recertification criteria will come soon,” said Little after her conference presentation.

She emphasized that contractors must still complete DBE paperwork for current contracts because the program still exists. A USDOT webpage with commonly asked questions states that contracts with DBE goals that were executed prior to October 3, 2025, are not required to be modified, but DBE participation on such contracts cannot be counted toward the DBE contract goal or toward the recipient’s overall DBE goal until the UCP completes the reevaluation process. In Alaska, DOT&PF manages applications and certifications, and therefore sets overall DBE goals for federally funded projects in the state.

If, after the reevaluation, every DBE performing work on a current contract is recertified under the new standards, the contract need not be modified. In contrast, if a DBE performing work on a contract is not recertified during the reevaluation process, then DOT&PF will be required to take appropriate action to discontinue the effect of the unconstitutional certification. If DOT&PF does not take appropriate action with respect to a contract, USDOT will not make any payments related to contract.

Until recertification occurs, DBE work on existing contracts will not be reviewed because DBE participation on a project can’t be properly counted.

While existing contracts must continue reporting as normal, the IFR requires changes to pending authorized/advertised projects and contracts. If DOT&PF has advertised a contract that contains DBE goals but the bids have not yet been opened, USDOT states on its question/answer webpage that advertisement amendments must be issued, removing the DBE contract goals.

If bids have been opened on a project that contained DBE contract goals but the contract has not yet been awarded, DOT&PF must zero out the DBE goal. USDOT states recipients may amend contracts without re-advertising the projects, but leaves it up to recipients to determine if state law requires the contract to be readvertised. That’s not to say a contractor can terminate a DBE or any part of a DBE company’s work because it is now decertified, just because the DBE program is in a reevaluation period. “Good cause does not exist if the prime contractor seeks to terminate a DBE or any portion of its work that it relied upon to obtain the contract so that the prime contractor can self-perform the work for which the DBE contractor was engaged, or so that the prime contractor can substitute another DBE or non-DBE contractor after contract award,” the USDOT question and answer page states.

However, if a DBE loses its certification after the reevaluation process and becomes ineligible to receive DBE credit for the type of work required, the ineligibility would constitute good cause for termination, the USDOT page states.

That said, Little says DOT&PF encourages prime contractors in Alaska to continue including smaller contractors on their projects. “Whether you get credit or not, it’s obviously important to the industry and the survivability of our whole program that we keep utilizing those smaller resources, helping build them up,” says Little.

The Alaska certification program is only allowed to reevaluate certifications that originated within Alaska. DBEs that received interstate certification will be reevaluated by UCPs in the jurisdiction where their original certification was issued. If DBEs are recertified by the original UCP, they will be required to reapply for interstate certification in the areas for which they wish to be certified.

For now, though, it’s a waiting game for everyone involved in the program. Each UCP is required to reach out to currently certified DBEs, inviting them to submit documentation demonstrating eligibility under the new standards—but that won’t happen until new standards are identified. During this limbo period there is no deadline for a currently certified DBE to submit documentation to recertify; however, companies that fail to submit the required information after new standards are created will no longer be considered DBEs. There is also no deadline for UCPs to complete their certification reevaluation process. USDOT regulations only require UCPs to complete the reevaluation process “as quickly as practicable.”

DOT&PF’s DBE goals are on hold until the reevaluation process is complete. The state uses a three-year methodology, developed in accordance with federal regulations, to determine its overall DBE goals. Goals are based on evidence that DBE firms are capable of working on federally assisted contracts.

DOT&PF also determines whether overall goals will be met through either race-conscious or race-neutral means. In this case, a race-conscious program is one that focuses on and provides benefits only to DBEs (e.g., contract goal setting), while a race-neutral program benefits DBEs without being solely focused on DBE firms (e.g., customary competitive procurement). According to DOT&PF’s Federal Fiscal Year 2025-2027 Disadvantaged Business Enterprise Goal Methodology report released September 1, 2024, the department had established an overall DBE goal of 1 percent, achieved through race-neutral means.

If the DBE program certification process isn’t based on race or gender, what will it be based on? In his injunction order, Van Tatenhove wrote, “Even if the DBE program’s presumptions were enjoined, the program would still continue to operate with its race- and gender-neutral requirements—including social and economic disadvantage, business size and structure, ownership, and wealth limits—intact.”

While DOT&PF sorts out the new DBE framework pending USDOT’s revised rules, the underlying legal question has yet to reach finality. Plaintiffs in Mid-America Milling offered in May to settle in exchange for terms later advanced as the IFR. However, a coalition of DBEs filed to intervene in the case so they can argue for the program’s continuation.